Food-tech unicorn Swiggy secures $1 bn in new round as valuation nearly triples

Online food delivery startup Swiggy has raised $1 billion (just short of Rs 7,000 crore at current exchange rates) in a fresh round of funding led by South African technology conglomerate Naspers, marking one of the single-largest infusions into an Indian startup.

In a statement, Swiggy said that the Series H round also received contributions from new investors including Chinese conglomerate Tencent, Hillhouse Capital and Wellington Management Company.

Apart from Naspers, existing investors who participated in the round included DST Global, Meituan Dianping  and Coatue Management, it added.

The development comes two months after TechCircle reported that Swiggy was on the verge of securing $900 million in fresh funding.

"The target was to raise $900 million. But the round had a lot of incoming interest and was over-subscribed by the time the term sheet closed," a person privy to the transaction told TechCircle.

The investment valued Swiggy in the ballpark of $3.3 billion, a second person said. This would mean that its valuation has more than doubled since it raised capital six months ago.

The first person cited above said the latest transaction is a combination of primary and secondary capital. TechCircle had reported the secondary sale of shares by Swiggy's early investors in October.

“RB Investments and Bessemer Venture Partners have sold their entire stake while Norwest Venture Partners has booked profits by selling off partial stake in the company,” the person added. “Accel and a couple of others are expected to sell some part of their stakes.”

The exits could not be independently confirmed with the concerned investors at the time of publishing this report.

The company’s other investors include SAIF Partners and Harmony Partners.

Swiggy further said that it will use the fresh capital to on-board more food brands, hire talent for its engineering vertical, and ramp up its technology backbone.

“Swiggy has 10x the number of orders per month since our first investment and has expanded throughout India to tier 1, 2 and 3 cities,” said Larry Illg, chief executive of food and ventures at Naspers.

Avendus Capital served as the financial adviser to Swiggy for the transaction.

Swiggy, run by Bengaluru-based Bundl Technologies Pvt. Ltd, is one of the fastest-scaling unicorns in the country. With the latest infusion, investors have poured around $1.26 billion into Swiggy till date.

Swiggy last raised $210 million (around Rs 1,400 crore) in a Series G investment round led by Naspers and Yuri Milner-led DST Global in June this year. A person familiar with the development had told VCCircle then that the investment valued Swiggy at $1.3 billion. A unicorn is a privately-held startup valued at over $1 billion. 

In February, it raised $100 million (Rs 640 crore then) in a Series F round led by Naspers. 

Swiggy was founded in August 2014 by Sriharsha Majety, Nandan Reddy and Rahul Jaimini. Majety and Reddy are engineers from BITS-Pilani while Jaimini is a graduate from the Indian Institute of Technology, Kharagpur.

Apart from Zomato, Swiggy competes with FreshMenu and Foodpanda India, which was acquired by homegrown cab-hailing major Ola late last year.

Zomato last raised funding in October, securing $210 million (Rs 1,500 crore) from Chinese e-commerce giant Alibaba Group’s payment affiliate.  

Zomato has raised more than $650 million till date, as per TechCircle estimates. 

Swiggy announced in October that it had launched delivery services in 16 cities — in addition to the 28 it already operated in — including Amritsar, Udaipur, Agra, Tirupur, Thiruvananthapuram and Bhubaneswar.

The firm delivered 25 million orders in November, the second person cited above said, with Zomato trailing in second place.

Swiggy has been on an acquisition spree lately. In August, it acquired online startup Scootsy Logistics Pvt. Ltd, which delivers food, fashion apparel and accessories, and home décor.

In December 2017, it had acqui-hired Bengaluru-based gourmet Asian food startup 48East.

In an interview with TechCircle earlier this year, Vivek Sunder, chief operating officer at Swiggy, said that the food-tech firm was open to acquisitions which can add to its strategic advantage.

Swiggy’s rapid expansion has had an impact on its financial performance too. 

Parent firm Bundl Technologies Pvt. Ltd reported that its net sales had more than tripled to Rs 442 crore in the financial year 2017-18 to narrow the gap with rival Zomato. However, its losses nearly doubled to Rs 397 crore on the back of expenditure that ballooned to Rs 865 crore in the last financial year.